Kash here.
This is Part 2 of my “Why You’ll Love DeFi” series.
If you missed Part 1, you can read it here… then make sure you come back here afterwards, because I’ve got some good stuff to share with you today (and some VERY terrible drawings too)…
You’re about to discover how…
- Make 15X Your Money From The “Gas” Powering DeFi Cryptos (Brace Yourself For Some Terrible Drawings)
- DeFi Is Invading A $22 Trillion Market (Double The Size Of Bitcoin’s Potential Market)
- It’s Never Been Easier To Invest In DeFi (And Crypto In General)
Let’s get stuck in with 3 more reasons why you’ll love DeFi…
1. Make 15X Your Money From The “Gas” Powering DeFi Cryptos (Brace Yourself For Some Terrible Drawings)
Let’s talk about Ethereum…
Maybe you’ve heard of it already?
It’s the world’s second largest cryptocurrency, right behind Bitcoin with $193 billion tied up in it…
And it’s VERY important when it comes to DeFi cryptos.
How so?
Well, most DeFi cryptos are built on the Ethereum platform… and powered by ether, the platform’s crypto.
Hold on…
What. The. Hell. Does. That. Mean?
And. Why. Should. You. Care?
Okay, think of Ethereum as a big country…
And all of the DeFI cryptos as cars driving around that country, delivering important services to the population…
Those cars obviously need something to fuel them, right?
And that’s where ether comes in, Ethereum’s native power source… it’s the “gas” or oil of this weird and wonderful little country…
Okay, maybe I need to work on my metaphors (and illustration skills!), but here’s the really important bit…
There is a limited amount of ether made each year… which means the more DeFi crypto cars there are driving around, or the further they’re driving… the more ether will be in demand…
And, crucially, the higher the price will go.
That’s exactly what’s been happening…
In Part 1 of this write up I showed you how the DeFi crypto sector has grown from $1 billion to $32 billion in less than a year… now with 64 different DeFi cryptos to choose from…
And, as expected, this had a knock on effect on the price of ether (remember, it’s what’s powering all those DeFi cryptos)…
It skyrocketed from $110 in May last year… to a high of $1,700 last week…
That’s a 15X increase in value in 9 months.
In other words, the potential to turn every £100 into £1,500… and every £1,000 into £15,000… again, in about 9 months…
Seriously good returns… and actually more than Bitcoin, which “only” quadrupled in price over the same time period.
So, it makes sense to include some ether in your crypto portfolio too, because as we’ve seen, there’s a correlation between the ether price and DeFi crypto growth…
And DeFI cryptos could actually wind up being bigger than Bitcoin…
2. DeFi Is Invading A $22 Trillion Market (Double The Size Of Bitcoin’s Potential Market)
Right now, Bitcoin is used by most people as “digital gold”…
In fact crypto investment firm, Grayscale – who hold $31 billion in crypto (it’s grown since I wrote about them in Part 1!) – are running a #DropGold campaign…
And it’s working, or something is anyway, because gold demand drastically dropped in 2020…
Meanwhile, the amount of Bitcoin “whales” (people holding large amounts of Bitcoin) has only increased since 2018…
(See the green line below…)
Comparing Bitcoin to gold makes sense because, like gold, there’s a limited supply of Bitcoin… around 21 million coins.
So, if you can imagine for a minute that Bitcoin could replace gold as the world’s favourite store of value, then that means Bitcoin’s potential market size is the same as gold’s… which is $10 trillion.
Right now, some estimates say Bitcoin has already hoovered up 2% of that market share… and yet it’s already worth $40,000+…
So, you can see why people like Goldman Sachs’ former hedge-fund chief says Bitcoin “is a wall of money” that has the potential to go to $1,000,000 in 5 years.
But, here’s the thing…
DeFi cryptos are actually taking on an EVEN BIGGER market than Bitcoin…
How big? Brace yourself because it’s a super duper big number (and I’ve put it in giant, colourful letters too)…
$22,000,000,000,000
That’s $22 trillion in case you hate counting zeros… more than TWICE the size of the gold market Bitcoin is gunning for…
And that’s because DeFi cryptos are challenging the ENTIRE traditional financial services sector.
They’re invading…
? Lending and borrowing
? Exchanges (betting and trading)
? Derivatives (like options and futures contracts)
? Fund management
? Stable national currencies (ones with a fixed price)
? Even the lottery!
Which means the scope for DeFi cryptos to go up in value is absolutely huge.
As I showed you in Part 1, DeFi cryptos already grew their market share from $1 billion to $32 billion in the last year…
A move that increased the value of the top 10 DeFi cryptos SIX TIMES over in the last 90 days alone.
And yet… DeFi still has trillions left in financial services to disrupt.
So, what do you think will happen to DeFi crypto prices when they syphon off another $32 billion from traditional finance?
Or how about if one day they hoover up all of the $22 trillion?
Could some DeFi cryptos outperform that $1,000,000 Bitcoin price prediction?
I can’t say for sure… but I’m sure going to be holding my portfolio of DeFi cryptos over the coming months and years to find out!
3. It’s Never Been Easier To Invest In DeFi (And Crypto In General)
When I first got into cryptocurrencies back in 2014, it was not simple to buy and sell.
In fact, in many ways it was downright risky!
I mean, I’m sure you’ve read about crypto slip ups and scams in the news, like these two examples…
? Stefan Thomas who received 7,200 bitcoins when they were worth just $6… and has now forgotten the password to his crypto wallet…
? And the famous $460 million hack on Mt. Gox, the first ever Bitcoin exchange, which the Japanese Times calls “The World’s Largest Bitcoin Heist”
But while stuff like this still happens (the story about the programmer is from 2020), it’s also never been easier and safer to get into crypto investing… as long as you take a bit of time to understand how everything works.
For example, we now have established crypto exchanges like Kraken, Coinbase, and Binance, where…
? ID verification is automated
? You can buy cryptos with the british pound (or many other national currencies)
? Setup takes less than 10 minutes
? And, most importantly, they offer many DeFi cryptos!
Then, when you want to take your crypto investing to the next level and move some of your cryptos off of the exchanges into a crypto wallet for extra control and privacy, that’s never been easier too…
You can easily (and relatively cheaply) buy crypto “hardware” wallets directly from their creators websites, or even from Amazon!
They come with simple instructions for use, and I’ve successfully helped older family members set them up without any trouble.
The most popular is the Nano Ledger, which looks a bit like a USB stick…
But there are also wallets from Trezor, Yubico, SecuX, and others.
Better yet, wallets specifically made for DeFi crypto investing have come on leaps and bounds over the last year…
For example, MetaMask has both a mobile phone app and browser plugin, which is something even non tech-savvy people can easily get their head around…
Better yet, there’s actually a very exciting recent innovation in crypto wallets that makes things even simpler… and, because of the way it works, you won’t need to remember any long complicated passphrases…
That would save people like that guy above who forgot his hardware wallet password a lot of trouble (and money)!
I’m talking about “social recovery wallets”.
Instead of having to remember a long complicated “mnemonic” password (or hide it in a bank vault somewhere)…
These wallets allow you to choose “guardians” among your friends and family who the wallet will double check with if, say, there is a large transaction on your account…
And then your guardians can just send you a WhatsApp message, ring, or even meet you in person if you’re feeling super top secret, to see if it’s really you or some evil cyber hacker before they confirm the transaction.
Right now, there are only two main contenders in this space, Ardent and Loopring, but I expect it to grow bigger and more accessible in the near future.
And I’m not the only one… Vitalik Buterin, the creator of Ethereum recently said, “we need wide adoption of social recovery wallets.”
I’m going to write more in-depth emails on exchanges, wallets, and risk levels for you soon, so keep an eye out for that.
Speaking of which, if you have any questions about today’s email, or crypto in general…
Simply email your questions to clients@thebetchat.com, and I’ll make sure I cover them in the days and weeks to come.
In fact, I’ll be back in touch in a few days time with the first Q&A answering the questions we’ve already received.
Thanks for taking the time to read this.
